NEW YORK (TheStreet) -- Shaking off a severe winter and West Coast port strike, the Labor Department is expected to report the economy added 220,000 jobs in May. That's well below the 269,000 monthly average for 2014. A strong dollar, revived productivity growth and shortage of qualified workers will slow jobs creation going forward.
First-quarter GDP contracted 0.9% and prospects for the balance of the year are for improved but hardly spectacular growth -- averaging perhaps 2.5%.
Housing is picking up -- existing home sales are scoring strong price gains and new-home construction is making up for time lost to winter snows. However, traffic remains slow in new-home showrooms, as first-time buyers are largely absent and builders focus on high end, older and wealthier customers.
Manufacturing remains weak -- and now more troubled. The strong dollar reduced exports, boosted imports and subtracted 1.3 percentage points from growth in the first quarter. Its most significant negative effects on the price competitiveness of U.S. factories are yet to be felt.
Throughout the recovery, the administration has resisted suggestions from economists and pressures from congress to take substantive steps to remedy the overvalued dollar.
Now with Japan and South Korea explicitly targeting the dollar through their monetary policies and trouble brewing in China's bubble economy, the burdens of an overvalued dollar will weigh heavily on U.S. manufacturers and exporters of services in information technology, media and other intellectual property driven industries.
Over the last 40 years, productivity growth has fluctuated greatly but averaged about 2% a year. Recently, it has trended downward, scoring 1.6, 1.0, 0.9 and 0.7% for 2011 through 2014, respectively. And in both the fourth and first quarters, output per worker fell more than 2%.